B-162007, AUG. 4, 1967

B-162007: Aug 4, 1967

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SUPPLIER WHO AFTER AWARD OF CONTRACT FOR FURNISHING PLASTIC BAGS ALLEGED THAT QUOTATION FROM SUPPLIER WAS ERRONEOUS MAY HAVE CONTRACT PRICE ADJUSTED SINCE OFFER ON REQUEST FOR QUOTATIONS WAS 43 PERCENT TO 46 PERCENT LOWER PER ITEM THAN NEXT LOW OFFERS AND CONTRACTING OFFICER SHOULD HAVE BEEN ALERTED TO PROBABILITY OF AN ERROR AND REQUESTED VERIFICATION BEFORE AWARD. GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER DATED JULY 8. IT IS REPORTED THAT FOUR OFFERS WERE RECEIVED IN RESPONSE TO A SOLICITATION FOR DEFINITE QUANTITIES OF ROLLS OF TEAR-OFF PLASTIC BAGS AND THAT ALTHOUGH GLOBE'S OFFERS WERE APPROXIMATELY 43 PERCENT TO 46 PERCENT LOWER PER ITEM THAN THE NEXT LOW OFFERS THEY WERE ACCEPTED WITHOUT ANY REQUEST HAVING BEEN MADE FOR VERIFICATION.

B-162007, AUG. 4, 1967

CONTRACTS - REFORMATION - JUSTIFICATION DECISION TO ADMINISTRATOR GENERAL SERVICES ADMIN. RE MISTAKE ALLEGED BY GLOBE PLASTIC COMPANY UNDER NEGOTIATED PROCUREMENT. SUPPLIER WHO AFTER AWARD OF CONTRACT FOR FURNISHING PLASTIC BAGS ALLEGED THAT QUOTATION FROM SUPPLIER WAS ERRONEOUS MAY HAVE CONTRACT PRICE ADJUSTED SINCE OFFER ON REQUEST FOR QUOTATIONS WAS 43 PERCENT TO 46 PERCENT LOWER PER ITEM THAN NEXT LOW OFFERS AND CONTRACTING OFFICER SHOULD HAVE BEEN ALERTED TO PROBABILITY OF AN ERROR AND REQUESTED VERIFICATION BEFORE AWARD.

TO THE HONORABLE LAWSON B. KNOTT, JR., ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER DATED JULY 8, 1967, WITH ENCLOSURES, REQUESTING OUR REVIEW AND CONSIDERATION OF THE ACTION PROPOSED TO BE TAKEN WITH RESPECT TO A MISTAKE IN BID ALLEGED BY GLOBE PLASTIC COMPANY SHORTLY AFTER ISSUANCE OF PURCHASE ORDER NO. SE-B F8548-A1-J ON NOVEMBER 4, 1966.

IT IS REPORTED THAT FOUR OFFERS WERE RECEIVED IN RESPONSE TO A SOLICITATION FOR DEFINITE QUANTITIES OF ROLLS OF TEAR-OFF PLASTIC BAGS AND THAT ALTHOUGH GLOBE'S OFFERS WERE APPROXIMATELY 43 PERCENT TO 46 PERCENT LOWER PER ITEM THAN THE NEXT LOW OFFERS THEY WERE ACCEPTED WITHOUT ANY REQUEST HAVING BEEN MADE FOR VERIFICATION. ON NOVEMBER 10, 1966, THE COMPANY INFORMED THE GOVERNMENT OF MISTAKES IN ITS QUOTATIONS IN THAT THEY WERE PREDICATED UPON A SUBCONTRACTOR'S ERRONEOUS QUOTATION IN WHICH ONLY ONE SIDE OF THE BAGS' DIMENSIONS WAS USED FOR DETERMINING THE POUNDS OF PLASTIC NECESSARY TO FILL THE ORDER. THE EVIDENCE SUBMITTED BY GLOBE DEMONSTRATES THAT ITS SUBCONTRACTOR'S ITEM PRICES WERE DETERMINED BY MERELY MULTIPLYING THE REQUIRED POUNDS OF PLASTIC BY A PER POUND COST FACTOR FOR EACH SIZE BAG. THEREFORE, IT IS ALLEGED THAT THE PRICES QUOTED BY THE SUBCONTRACTOR WERE ONE HALF THE TRUE PRICES. GLOBE FURTHER ALLEGES THAT ITS MARKUP ON THE SUBCONTRACTOR'S PRICE WAS SUCH THAT IT COULD NOT BE LOWERED REGARDLESS OF ADDITIONAL VOLUME.

AS A GENERAL RULE, WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, THE CONTRACT IS NOT SUBJECT TO REFORMATION SINCE A BINDING AND ENFORCEABLE CONTRACT ARISES UPON ACCEPTANCE. SALIGMAN V. UNITED STATES, 56 F. SUPP. 505, AND CASES CITED THEREIN. THIS GENERAL RULE, HOWEVER, IS NOT FOR APPLICATION WHERE THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD. IN SUCH CASES, ACCEPTANCE BY THE CONTRACTING OFFICER DOES NOT RESULT IN A BINDING CONTRACT AND EITHER OUR OFFICE OR THE COURTS MAY ALLOW APPROPRIATE RELIEF. 37 COMP. GEN. 685; 17 COMP. GEN. 575. IN THIS CASE A 43 PERCENT TO 46 PERCENT RANGE BETWEEN THE LOW OFFERS AND SEVERAL OTHER OFFERS SHOULD HAVE ALERTED THE CONTRACTING OFFICER OF THE PROBABILITY OF AN ERROR IN BID. WE FURTHER NOTE THAT GLOBE PROBABLY WAS NOT AWARE OF THE ERROR IN ITS SUPPLIER'S BID INASMUCH AS IT ALLEGES TO BE UNFAMILIAR WITH BOTH THE EXTRUSION AND MANUFACTURE OF THE REQUIRED ITEMS AND THAT GLOBE COULD NOT HAVE COMPARED ITS OFFERS WITH OTHER OFFERS BEFORE AWARD BECAUSE THE PROCUREMENT WAS CONDUCTED UNDER NEGOTIATION PROCEDURES WHICH PROHIBIT DIVULGENCE OF SUCH INFORMATION. THEREFORE WE BELIEVE THE CONTRACT PRICE MAY BE ADJUSTED IN THIS CASE.

ACCORDINGLY, YOU ARE ADVISED THAT WE WOULD HAVE NO OBJECTION TO THE PROPOSED INCREASE OF THE CONTRACT PRICE BY $9,644.11, SO AS TO EQUAL THE NEXT LOW ACCEPTABLE OFFERS, WHICH THE CONTRACTING OFFICER BELIEVES TO BE REASONABLE.

AS REQUESTED, THE ADMINISTRATIVE FILE OF THE CASE IS RETURNED HEREWITH.